Japan, Australia Stock Futures Fall on U.S., Europe Debt Crisis

Japanese and Australian stock futures fell on concern U.S. lawmakers will fail to reach a deal on the country’s debt limit two weeks before a deadline and Europe’s worsening crisis will slow the global economic recovery.

American depositary receipts of Nissan Motor Co., a Japanese automaker that gets one third of its revenue in North America, declined 1.1 percent from the closing share price in Tokyo on July 15 after stress tests on European banks failed to alleviate investor concern over the region’s debt woes. Those of Canon Inc., which counts Europe as its largest market, declined 1.2 percent. ADRs of BHP Billiton Ltd. (BHP), the world’s biggest mining company and Australia’s No. 1 oil producer, retreated 1.4 percent in Sydney after oil pricesdeclined.

Futures on Japan’s Nikkei 225 (NKY) Stock Average expiring in September closed at 9,870 in Chicago yesterday, compared with 9,970 in Osaka, Japan, on July 15. They were bid in the pre- market at 9,900 in Osaka at 8:05 a.m. local time. Markets were closed in Japan yesterday for a holiday. Futures on Australia’s S&P/ASX 200 Index slid 0.5 percent today. New Zealand’s NZX 50 Index declined 0.5 percent in Wellington.

“On top of uncertainty about the U.S. economy, there can only be negativity if the U.S. governments’ functionality becomes paralyzed,” said Fumiyuki Nakanishi, senior strategist at SMBC Friend Securities Co. in Tokyo. “In Europe, the stress tests are being seen as too soft, and it’s just postponing the potential for problems.”

Global Decline

Futures on the Standard & Poor’s 500 Index were little changed today. In New York, the index slipped 0.8 percent to 1,305.44 yesterday, pushing the measure to its worst seven-day period in more than a month, amid concern U.S. lawmakers will fail to reach a deal on the nation’s debt limit two weeks before an Aug. 2 deadline.

Global stocks declined amid President Barack Obama’s efforts to get lawmakers to agree to a deficit-cutting deal as the deadline for raising the debt ceiling nears. U.S. equities have been under pressure amid growing concern lawmakers will fail to reach an agreement to raise the nation’s $14.3 trillion debt limit.

Shares also declined after Goldman Sachs Group Inc. economists led by Jan Hatzius, based in Germany, cut their forecasts for real U.S. economic growth to 1.5 percent in the second quarter and 2.5 percent in the third quarter, from 2 percent and 3.25 percent respectively.

Stress Tests

European shares declined yesterday on concern the region’s banks may have to raise as much as 80 billion euros ($113 billion) of additional capital as stress tests failed to allay investor concern about a Greek default and governments’ ability to bail out their lenders.

The European Banking Authority said after the close of trading on July 15 that eight of the 90 banks had failed the stress tests. Regulators didn’t include a Greek default in the tests even though credit default swaps indicate investors see an almost 90 percent chance of one.

Crude oil for August delivery dropped １.4 percent to settle at $95.93 a barrel in New York yesterday. Oil futures have risen 26 percent in the past year.

The MSCI Asia Pacific Index lost 1.9 percent this year through yesterday, compared with a gain of 3.8 percent by the S&P 500 and a drop of 5 percent by the Stoxx Europe 600 Index in the same period. Stocks in the Asian benchmark are valued at 13.5 times estimated earnings on average, compared with 13.1 times for the S&P 500 and 10.5 times for the Stoxx 600.